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Little Impact Seen on Gas Prices

The impact of Hurricane Isaac on gasoline and diesel prices is seen as minimal by research firm GlobalData.

The U.S. Department of Energy estimated that refining capacity of 936,500 barrels a day was offline—slightly more than 5% of the nation’s capacity to turn crude into fuel.

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GlobalData analyst Jeffrey Kerr said that he expected the shutdowns to last three to four days; given the level of stocks in the region (about 70 million barrels of gasoline and 38 million barrels of diesel) the interruption “will have a minimal impact to the supply of refined products,” he wrote in a report.

There’s a risk, however, that lengthy power outages could delay refinery start-ups. On Wednesday morning, more than half a million Entergy Corp. customers in Louisiana were without power, and it won’t be safe to go out and begin restoring electricity until winds drop below 30 miles per hour, Entergy spokesman Mike Burns said.

Phillips 66 reported Tuesday that its Alliance refinery at Belle Chase, La. lost power. That refinery is located in Plaquemines Parish, the thin arm of Louisiana stretching out into the Gulf that bore the initial brunt of the storm and experienced flooding in certain areas.

Flooding, according to Maxim Group-energy market specialist Eliecer Palacios, is a “key risk” to the region’s refineries.

Plaquemines Parish spokeswoman Caitlin Campbell said that so far no damage had been reported at the Belle Chase refinery, and that she believed no flooding had taken place there.

Both Phillips 66 and Valero Energy Corp. said that no inspections of their facilities in the storm’s path had been yet made, because employees were still waiting out the storm.

Comments (1 of 1)

It is amazing that such a shock to the system - 5% of the nation’s capacity being down will not have much of an impact on price. I cannot help but wonder if this might be because the increase in price has been spread out over the preceding weeks? The markets have a way of responding quickly, and I cannot help but question if prices did not already do most of their increasing as soon as it was clear the area would be hit. With so much of our economy - and the world's economy depending on oil and refined oil product prices are of the upmost importance. I was just listening to a podcast earlier today in which the Dean of the W. P. Carey School of Business went over the projected impact of oil on our GDP and how the market is responding. It was shocking to me that that oil use in the United States has had a visible decrease and Asia is currently using more oil than we are.